The Independent Uganda: You get the Truth we Pay the Price
African central banks are increasingly linking domestic gold refining to reserve management as countries move to retain more value from minerals. The shift reflects a broader effort to diversify away from foreign currency assets while strengthening local supply chains.
SPECIAL REPORT | BIRD AGENCY | Uganda’s foreign exchange reserves have risen by nearly 70%, according to the Bank of Uganda, as the country combines capital inflows with a new strategy of purchasing domestically refined gold to diversify its reserve assets.
The shift reflects a broader trend across Africa, where central banks are increasingly linking gold refining and local value chains to reserve accumulation, thereby reducing reliance on traditional foreign-currency holdings.
According to Brian Ngule, an economist and lecturer at Makerere University, countries are “what we are seeing across Africa is a policy shift where gold is no longer treated purely as a trade commodity but increasingly as a strategic asset that links industrial policy, export value retention, and reserve accumulation.”
The Bank of Uganda said the increase reflects “sustained foreign exchange inflows”, including foreign direct investment tied to energy infrastructure and portfolio investment into domestic debt markets.
Data compiled from central bank disclosures and market estimates show reserves rising from about US$1.5 billion in mid-2024 to close to US$6 billion in 2025.
The recovery follows earlier pressure on external balances during periods of tighter global liquidity, when access to foreign currency weakened, and reserve buffers declined.
Alongside inflows, the central bank has introduced a domestic gold purchase programme as part of its reserve management strategy.
In a statement announcing the initiative, the Bank of Uganda said the programme is intended to “build and diversify Uganda’s foreign exchange reserves portfolio by purchasing and processing domestically mined gold and including it in the foreign exchange reserves”.
The programme, launched in April 2026, is structured as a three-year pilot under which the central bank will buy gold from licensed local producers in local currency at international market prices.
Separately, the central bank has signed contracts worth about US$160 million with local refiners, including EuroGold Refinery Ltd and Feldstein Trading Limited, to supply domestically refined gold under the programme.
According to details of the agreement, initial purchases will include at least 100 kilograms of gold sourced from local refining operations, to promote value addition and reduce the export of unprocessed material.
Officials say the arrangement is part of a broader framework to strengthen local supply chains, improve transparency in gold trading, and retain a larger share of export value within the domestic economy.
The central bank also noted that the programme will “support the livelihoods of artisanal and small-scale miners,” linking reserve management to domestic production and processing activity.
Uganda’s gold sector has expanded significantly in recent years.
According to trade data cited in financial reporting, the country exported approximately US$5.8 billion worth of gold in 2025, representing a 76% increase compared with the previous year.
While much of this gold is sourced from regional supply and refined domestically, the scale of exports has positioned gold as a major contributor to Uganda’s foreign exchange earnings.
The introduction of a domestic purchase programme allows part of this flow to be retained within official reserves.
Across the continent, governments are moving to capture more value from gold.
Authorities in the Democratic Republic of the Congo have opened the country’s first gold refinery in Kalemie, a facility that can process between 500 and 600 kilograms a month and support the rebuilding of monetary gold reserves through a state-backed trading framework.
Government officials in Mali have begun constructing a Russian-backed refinery with a planned 200-tonne capacity, describing the project as part of efforts to strengthen economic sovereignty and retain more value domestically.
Rwanda has developed refining capacity in Kigali to process gold from across the region, while Angola and Guinea have also expanded or initiated refinery projects in recent years.
Uganda and South Africa have similarly invested in refining infrastructure, positioning themselves as processing hubs within regional gold supply chains.
The common pattern is a shift away from exporting raw or semi-processed gold toward domestic refining, tighter oversight of supply chains, and increased retention of export value.
This transition is also intersecting with reserve management strategies.
Across Africa, total reserves reached approximately US$530 billion in 2025, up from about US$480 billion in 2024, according to aggregated central bank and market data.
Gold’s share of these reserves has increased to around 17%, compared with less than 10% between 2022 and 2023, while physical holdings rose from about 663 tonnes to an estimated 738 tonnes over the same period.
A 2023 survey by the World Gold Council found that a “substantial share” of central banks expressed concern about sanctions risk following the freezing of a significant portion of Russia’s foreign exchange reserves.
The survey also pointed to increased interest in gold as a reserve asset due to its lack of counterparty risk.
Countries across Africa are adopting different approaches to this shift.
Authorities in Ghana have implemented a gold purchase and monetisation programme that has generated inflows while supporting foreign exchange buffers.
The central bank in Kenya has signalled plans to begin purchasing gold as part of reserve diversification.
Reserve levels continue to reflect country-specific pressures.
Data from the Central Bank of Nigeria shows that Nigeria’s external reserves declined by about US$731 million in the first three weeks of April 2026.
The central bank attributed the movement to foreign exchange interventions, external debt servicing, and market demand for dollars, describing the changes as part of normal fluctuations within a market-driven system.
Despite the decline, officials said reserve levels remain above international benchmarks and continue to provide a buffer against external shocks.
Authorities in Namibia have focused on managing external debt obligations, including the redemption of a US$750 million Eurobond, while reserves are projected to decline.
Reserves in Zimbabwe remain relatively low, estimated at US$701 million, despite efforts to support monetary stability through a gold-linked currency framework.
Within this continental context, Uganda’s reserve build reflects a combination of inflows and policy measures.
The Bank of Uganda has previously stated that foreign exchange reserves serve as a “stabilizing buffer” used to meet external obligations, manage currency volatility, and support imports.
The central bank has also noted that maintaining adequate reserves depends on sustained inflows and stable external financing conditions.
Market analysts have pointed to increased investor participation in government securities and early-stage capital linked to oil development as key contributors to recent inflows.
“Such flows are typically influenced by global interest rate conditions and broader investor risk sentiment,” according to Ngule.
Uganda is expected to begin oil production later this decade, which officials have indicated could strengthen export earnings and support the external position over the medium term.
Until then, reserve accumulation is being supported by a mix of capital inflows and policy-driven diversification measures.
“Future changes in reserve levels will depend on the continuation of inflows, the implementation of the gold purchase programme, and developments in Uganda’s export sectors, including oil,” according to Ngule, the economist.
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SOURCE: Bonface Orucho, bird story agency
